Question

Text book: Internal Auditing: Assurance & Advisory Services, Fourth Edition

Chapter 3 Governance

What are the answers to those two questions?

What types of outcomes might a board need to consider to understand stakeholders expectations? 7. In governance, what are the key responsibilities of a. The board of directors? b. Senior management? c. Risk owners?

Answer 1

Answer to Question No.6: Before proceeding to the answer we shall first understand about:"Who are the stakeholders". They might be the individuals or groups who are interested in the business and is having a firm griphold over that business. He might influence the business directly or indirectly. The nature of stakeholders might be in the form of person who tries to directly influence the business with his powers. A stakeholder might be in the form of internal or external customer. The other nature of stakeholders might be those groups who are interested only in the increamental part of their EPS. So it is the bounded duty of the Board to keep the stakeholders happy by meeting their expectations on a timely basis.

For ex: A purchaser who purchases the goods might expect that the goods should reach him within a stipulated time from the date of the order and the product should be of a good banded one. In this case for ex: Amazon as a business holder tries to satisfy its customers by catering to the needs of various customers and from various angles. So the customer becomes a stakeholder for Amazon.

From the above example we can say that the needs and wants of the stakeholders vary from time to time.

Another example for the stakeholders is about the sharehoders who expect for an ontime dividend payment and also are interested in the price earning ratio of the share.  

So the board tries to find out the expectations through internal meetings and processes. However the board ought not to forget about the key stakeholders.These key stakeholders might pull out from the business at any point of time if they are not kept happy. So the Board has to understand this group and keep it happy. So in this case the needs and wants of the stakeholders are self explanatory.

To conclude we can say that the board must be able to track the expectations o the stakeholders through proper internal measures and controls and processes. These should be presented in presence of the key stkeholders.

Answer to Question 7: